How to calculate BSE SENSEX?

This article explains how the value of the “BSE Sensex” or “sensitive index” is calculated. If you are not sure what we mean by the Sensex or what the Sensex is all about, you can find this out by reading our “How to make money in the stock market?” article.

The Sensex has a very important function. The Sensex is supposed to be an indicator of the stocks in the BSE. It is supposed to show whether the stocks are generally going up, or generally going down.

To show this accurately, the Sensex is calculated taking into consideration stock prices of 30 different BSE listed companies. It is calculated using the “free-float market capitalization” method. This is a world wide accepted method as one of the best methods for calculating a stock market index.

Please note: The method used for calculating the Sensex and the 30 companies that are taken into consideration are changed from time to time. This is done to make the Sensex an accurate index and so that it represents the BSE stocks properly.

To really understand how the Sensex is calculated, you simply need to understand what the term “free-float market capitalization” means. (As we said earlier, the Sensex is calculated on basis of the “free-float market capitalization” method) But, before we understand what “free-float market capitalization” means, you first need to understand what “market capitalization” means.

What's the difference between a bomb, a missile, and a rocket?

A Bomb is unpowered (though they can be guided)
A Rocket is powered, but unguided.
A Missile is powered and guided.

There are exceptions to these definitions in that they only hold true for modern weapons of war.

An arrow is also termed a missile, though it is unpowered and unguided (after it has left the bow).

Space borne rockets are both powered and guided (unless they are ICBMs in which case they are modern weapons of war and termed missiles).

Why does February have only 28 days?

January and February both date from about the time of Rome’s founding. They were added to a calendar that had been divided into ten month-like periods whose lengths varied from 20 to 35 or more days. A winter season was not included, so those period lengths are believed to have been intended to reflect growth stages of crops and cattle.

When introduced, January was given 29 days and put at the beginning of the calendar year. February was given 23 days and put at the end. Then, for an undetermined period shortly after Rome’s founding, months were said to have begun when a new moon was first sighted. At some later time, month lengths were separated from lunations and again became fixed. At that time, February’s original length was extended by five days which gave it a total of 28.